HSR: Specialized heart hospitals are as cost-effective as full service hospitals

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Hospitals that cater exclusively to heart patients are no less cost-effective than full-service institutions, according to an analysis in the October issue of Health Services Research.

Kathleen Carey, PhD, of Boston University School of Public Health, and colleagues compared the costs of physician-owned cardiac, orthopedic and surgical single specialty hospitals with those of full-service hospital competitors. The primary data sources were the Medicare Cost Reports for 1998–2004 and hospital inpatient discharge data for three of the states where single specialty hospitals are most prevalent, Texas, California and Arizona.

The researchers found several key differences between cardiac, orthopedic and surgical specialty hospitals. Cardiac hospitals are more similar to the full-service hospitals in that they are larger and they offer emergency services.

The results did not provide evidence that specialty hospitals are more efficient than the full-service hospitals with whom they compete, the authors noted. In particular, orthopedic and surgical specialty hospitals appear to have significantly higher levels of cost inefficiency. Cardiac hospitals, however, do not appear to be different from competitors in this respect, according to the researchers.

Carey and colleagues found that the overall mean inefficiency score showed that all hospitals had costs that were about 28.1 percent higher than the minimum feasible costs. Specialty hospitals had a mean inefficiency score of 42.9 percent, compared with 27.4 percent for competitor hospitals.

The higher scores for specialty hospitals were driven by orthopedic and surgical specialty hospitals, which average 46.8 percent inefficiency, the investigators found. Cardiac specialty hospitals had an inefficiency score of 28.1 percent, which was not significantly different than competitors' scores—although the researchers said there were few observations on which to achieve a statistical effect.

“There is something going on, but we're not quite sure what it is,” Carey said, regarding the disparity between cardiac and orthopedic and surgical hospitals, adding that they hope to address this in future studies.

However, based on their research, the authors concluded that “policymakers should not embrace the assumption that physician-owned specialty hospitals produce patient care more efficiently than their full-service hospital competitors.”